Committee

Mr Speaker: Committee stage, what day?

Mr Hart: Now, Sir. Mr Speaker, Sir, I move,

That the Assembly do resolve itself into Committee on the Bill.

Mr Chew Swee Kee: I second it.

Question put, and agreed to.

Bill considered in Committee.

[Mr Speaker in the Chair]

Clauses 1 to 5 inclusive ordered to stand part of the Bill.

Clause 6 -

Mr Hart: Sir, I have an amendment to propose to sub-clause (6) of clause 6. I think, Sir, that the amendment which I propose has been placed before hon. Members, but perhaps I could read it out for the purposes of the record. The amendment is as follows:

At page 7, to leave out lines 10 to 19 and insert:

"For the purposes of this section, where any dividend has been paid without deduction of tax, such dividend or part thereof, from which there was a title to deduct tax, shall be deemed to be a dividend of such a gross amount as after deduction of tax at the rate deductible at the date of payment would be equal to the net amount paid; and a sum equal to the difference between such gross amount and the net amount paid shall be deemed to have been deducted from such dividend or part thereof as tax."

Sir, I will not go into any detailed explanation of this sub-clause, Sir. It is a complicated and difficult matter and I might get into very deep water if I tried to explain in simple language what it is about. I have, however, in the course of my introductory speech given the reason why this sub-clause is substituted and I think I said that it has the full support not only of the Income Tax authorities but also of the accountancy profession, and the sub-clause itself has been drafted by the Law Officers.

Question, "That the words proposed to be left out, be left out," put, and agreed to.

Question, "That the words proposed to be inserted, be there inserted," put, and agreed to.

Clause, as amended, ordered to stand part of the Bill.

Clause 7 -

Mr Lim Koon Teck: Mr Chairman, Sir, I move,

At page 8, to leave out lines 13 to 16 and insert:

"Provided that such notice may be given only in respect of a period of six years prior to the year of assessment."

Amendment handed in.

The Chief Minister: That will take us to 1941.

Mr Lim Koon Teck: No, 1949.

The Chairman: Order, please. Perhaps the hon. mover of the amendment will explain later. The amendment is in order.

Mr Lim Koon Teck: Sir, I do not propose to speak very much on this point. I think it has been fairly well debated and ventilated so far. There are, however, one or two points that I would like to make.

The first is this, Sir. The Hon. the Financial Secretary has said that under Section 69, as it stands at present, there is power given to the Comptroller to pursue any tax-payer suspected of evasion to the limit. If that is so, I really cannot see why there is any objection to a limit being put here, where we are giving him excess power.

The other point that I want to make is this - that under my amendment, the year will not be 1941, as the Chief Minister indicated just now, but it will be 1949. My amendment says that the power to call for these accounts and statement of assets is limited to a period of six years prior to the year of assessment. The year of assessment is always the 12 months preceding that year when tax is leviable. Take, for example, this year - 1956. The year of assessment is 1955, and a six-year period will take it up to 1949.

My main purpose in asking for a limited period is that I feel sure that by such a limit the officers in the Income Tax Department will be kept on their toes and be very thorough and quick in their examination of accounts, instead of letting things slide and taking them up many, many years afterwards.

Question proposed, "That the words proposed to be left out, be left out."

The Chief Minister: Mr Chairman, Sir, I think I have indicated that Government is seeking at the present moment to tighten very considerably the methods of collection and to try to plug the very considerable evasions.

I think I can cap the story told by the Member for Tanjong Pagar (Mr Lee Kuan Yew) from my own personal experience. It occurred in my own office where a person charged with a crime put up a story, and I said, "If this is true, it will help the Court immeasurably to believe it if you can produce your accounts." And through my clerk, he said, "Which set, Sir?" Very naively, I said to the clerk. "Oh, no, not really! He does not have two sets of accounts!" And this, Sir, actually came back through the clerk, "I have three sets - one for myself; one for my partner; and one for the Income Tax Department!" That did occur!

Sir, very large-scale evasions are taking place. Government is at the present moment considering the question of publication, by authority of this Assembly, of the names and the income totals of all the income taxpayers in the hope that the general public, reading that book, would be able to assist the Income Tax Department in pointing out the under-declarations therein indicated. You will be surprised to learn, Sir, that there are, out of a total of 1,200,000 people in Singapore, 20,000 taxpayers and a large proportion are the salaried men.

Sir, I ask that the measures which Government requests of this House be accorded it for a few years in order to see to what extent we can succeed in stemming large-scale evasions. It is hardly probable that there will be any abuse of the small man. I do not deny that there is a possibility of the eventualities indicated by the Member for Serangoon. The possibility does exist, Sir, but I say that it is hardly probable that the Income Tax Department, which has been called upon to tighten its procedure and its methods in collecting moneys due to Government, would waste time with the very small trader. I say let us have these measures which we seek of you, and if in the course of the next two or three years there are indications of abuse, then, by all means, on evidence thereof, limit them. But if you ask us to limit now to 1947 - although frankly I feel that the proviso is a little too vaguely worded to carry out that intention - but if that is the intention, then you are really preventing us from asking a person, whose guilt is, say, evidenced in transactions in 1953, to produce his accounts which we should like to trace as far back as possible. You are quite unnecessarily there assisting those who shamelessly refuse to carry a very moderate burden in respect of the maintenance of the services of this country. I say, Sir, that the time may well come when the limitations sought by the hon. Member would be justified, but the time is not now.

Mr John Ede: Sir, I think there is some misunderstanding about the purpose of this amendment. It has been stated, entirely rightly, that under Section 69 of the present Income Tax Ordinance there is provision that where there is any form of fraud or wilful default, the Comptroller may assess such person at any time, and therefore the amendment does not arise in the case of such a person. The Government has already had the powers, and why, therefore, is the Government concerned regarding this amendment?

This clause 7, as it stands, enables the Comptroller to require particulars of banking accounts, etc. from any person, not necessarily fraudulent persons back to 1947, which means, in effect, that such accounts must be kept indefinitely by everyone liable to income tax, whether now or in the future, on the off chance that they may be called upon. It may not be intended, but this is what it states. The purpose of the amendment is quite clear, Sir. Whereas under Section 69 of the main Ordinance the Comptroller may only make additional assessment for a back period of six years, so should he only be permitted to call for details of accounts, if necessary, for a similar period. It is logical. It is reasonable.

It is all very well for the Hon. the Financial Secretary to assure us that the honest man cannot be affected. The innocent have suffered with the guilty before now, and the former deserve the protection which this amendment will afford them in some measure. The latter, under Section 69, in any case, will not escape, and we do not desire them to escape.

The Attorney-General (Mr C. H. Butterfield): Sir, I would just like to speak, quite briefly, on a point which has been made by the Member for Tanglin. I think he said - and I am speaking now because I think he is wrong in saying so - that the Financial Secretary has stated that there are already the powers which this new Section 61A will confer and therefore it is not necessary that those powers should be expressly conferred , in the new section. What I think he had in mind, when he was saying that, was the proviso to Section 69 of the Ordinance which the Member for Paya Lebar (Mr Lim Koon Teck) did not read out.

I think the real position is this: that Section 69 recognises the principle that where there is fraud, the Comptroller can assess back beyond the ordinary limiting period of six years. That section does not give him the powers which the new section will confer upon him. It does not give him the powers to demand the production of accounts, a statement of assets and so on. The principle is recognised in Section 69 and this principle is incorporated in the proposed new Section 61A which will give the Comptroller the powers which, in fact, he has not at present got.

Question, "That the words proposed to be left out, be left out," put, and negatived.

Clause ordered to stand part of the Bill.

Clause 8 ordered to stand part of the Bill.

The Schedule ordered to stand part of the Bill.

Mr Hart: Sir, I beg to move, "That the Bill, as amended, be reported to the Assembly."

Question put, and agreed to.

Bill reported, with an Amendment.

Third Reading

Mr Speaker: Third Reading, what day?

Mr Hart: Now, Sir. I beg to move, "That the Bill, as amended, be now read the Third time."

Mr Chew Swee Kee: I second it.

Question put, and agreed to.

Bill, as amended, accordingly read the Third time.